Delayed filing of Form 10-IC is directory and procedural; does not invalidate section 115BAA option exercised in return of income if conditions satisfied and no revenue prejudice.

ORDER 

PER VIKRAM SINGH YADAV, A.M :

This is an appeal filed by the assessee against the order of the Learned ADDL/JCIT(A)-2, Delhi [‘Ld.CIT(A)’], dated 10-11-2025, pertaining to Assessment Year (AY) 2020-21, wherein the assessee has challenged the order of the Ld.CIT(A), wherein he has confirmed the action of the CPC, Bengaluru in denying the applicability of lower tax rate provided u/s 115BAA of the Income Tax Act, 1961 (‘the Act’).

2. During the course of hearing, the Ld.AR submitted that the assessee- company filed its return of income for the impugned assessment year on 06-12-2020 well before the extended due date of filing of the return of income. It was submitted that in the return of income, the assessee- company has exercised the option for concessional tax regime u/s. 115BAA of the Act and has selected the appropriate option in ITR-6 form. It was also submitted that the assessee-company satisfies all the conditions for availing the concessional tax regime u/s. 115BAA of the Act. It was submitted that being the first year of opting for section 115BAA, and due to Covid-pandemic, filing of Form-10IC was inadvertently missed. It was also submitted that the IT portal accepted the ITR form, without acknowledgment of Form-10IC. It was submitted that the CPC thereafter processed the return of income in terms of intimation u/s. 143(1) of the Act, dt. 24-12-2021, wherein the assessee-company has been denied the claim of lower tax rate u/s. 115BAA of the Act. However, before making such an adjustment, no opportunity has been given by the CPC to the assessee and thus, the principle of natural justice has been violated in absence of notice in terms of section 143(1)(a) of the Act and adjustment was made directly in the intimation u/s. 143(1) of the Act, issued to the assessee. It was submitted that upon receipt of the intimation, the assessee filed its submissions on e-filing portal confirming that the return was filed u/s. 115BAA of the Act. However, there was no communication from the CPC, Bengaluru or the Department regarding the actual reasons for the demand. The assessee thereafter approached the AO, seeking clarification on raising additional tax liability and later on, the assessee- company came to know about the default and procedural lapse of non- filing of Form 10IC and subsequently, filed Form-10IC with the AO and by that time, unfortunately, the deadline for filing Form-10IC has also lapsed. It was also submitted that during the financial year 2019-20, the country was severely impacted by the Covid-19 pandemic, multiple lockdowns, staff shortage, closure of offices and logistical disruptions created immense compliance challenges and submitted that the procedural lapse in filing Form-10IC occurred inadvertently and under exceptional circumstances, despite the assessee’s intent and good faith.

3. It was reiterated that in the return of income, the assessee has clearly opted for lower tax rate provided 115BAA of the Act and thus, the intention of the assessee-company cannot be doubted and the assessee satisfy all the requisite conditions for claiming lower tax rate and in fact, no dispute has been raised by either CPC or by the Ld.CIT(A). It was further submitted that the Hon’ble Courts and the Tribunals have consistently held that filing of Form-10IC is directory and not mandatory and if intention of the assessee is apparently clear, because of procedural lapses, the relief cannot be denied. In this regard, our reference was drawn to various